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NZ dollar benefits from domestic data

NZ Newswire logoNZ Newswire 19/06/2017 Rebecca Howard

New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand The New Zealand dollar extended its gain against the yen on Monday, benefiting after the Bank of Japan left its ultra-loose monetary policy unchanged last week.

Domestic data also painted an upbeat outlook ahead of this week's local interest rate review.

The kiwi rose to 80.76 yen as at 5pm from 80.34 yen late Friday. It was trading at US72.78c from 72.48c Friday and at A95.50c versus A95.06c.

Economists expect New Zealand's Reserve Bank to keep rates on hold at 1.75 per cent.

In contrast, the Bank of Japan maintained its quantitative easing programme and extraordinarily low interest rate policy, at a time when other major central banks are moving to lift rates.

Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, said it was unusual to see the kiwi so bid against the yen ahead of the central bank's rate decision on Thursday.

Mr Kelleher said the kiwi's strength on the yen cross "could be M&A or balance sheet related" with demand largely coming from offshore, and was broadly stronger against most currencies.

"It's been orderly. It's not gapping higher but it's not backing off," he said, adding it could have further to run as "it has lots of momentum into Europe".

Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong, said domestic data had played a role in the kiwi's popularity on the day. "We had some peripheral domestic data out, the Westpac Q2 consumer confidence and the PSI, both of which were positive.''

New Zealand's services sector, which accounts for about two-thirds of the economy, bounced back in May after a number of external factors, such as the weather, corrected themselves while consumer confidence gained in the June quarter and reached its highest level since early 2015.

The kiwi rose to 56.96 British pence from 56.44 pence and traded at 65.01 euro cents from 64.73 cents. The kiwi rose to 4.9570 yuan from 4.9357 yuan.

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